Saving Money the Expensive Way
We all want to save money. However, working with the least expensive service provider may be a very expensive way to reach your financial goals. Intelligent property owners consider a wide range of issues when selecting a service provider. Here you will find some guidance on selecting a professional contractor and saving money in the process.Case Study—Saving Money the Expensive Way
Parts of this article are based on the following court case, 2002 California Court of Appeal decision in Fernandez v. Lawson, 119 Cal.Rptr.2d 767.Mr. Home Owner received multiple bids while selecting a contractor for a service. Trying to do the right thing, Mr. Home Owner asked Mr. Low Bid for proof of liability and workers compensation insurance prior to beginning work. Mr. Low Bid assured Mr. Home Owner that insurance was in place and current. However, no documentation was provided to Mr. Home Owner prior to beginning the work. In reality, Mr. Low Bid had allowed insurance coverage to expire in an effort to keep prices lower than his competitors. The first day of work, Ms. Employee, an employee of Mr. Low Bid, was seriously injured on the job.
When the injured worker, Ms. Employee, found out she was not covered by workers compensation she sued, naming both Mr. Low Bid and Mr. Home Owner in the suit. Who do you think should pay Ms. Employee’s medical bills?
In this case the court ruled in favor of Ms. Employee and against Mr. Property Owner. The court stated that the Mr. Property Owner should have verified Mr. Low Bid’s claims about insurance. Failing to do so, the court ruled that Mr. Property Owner assumed the role of direct employer of Ms. Employee. As such, Mr. Property Owner was held responsible for the medical expenses of the injured worker. The final cost to Mr. Property Owner of saving a few dollars by going with the ‘cheaper’ estimate was over $26,000!
Save Big Money When Hiring Contractors
There are many ways to save money on services, but hiring a company that exposes you to significant risks or less than the best performance is not the way to do it. Here are some proven ways to save money when hiring a contractor.- Choose an insured and bonded business. Make sure you see copies of insurance forms before the work begins. The forms should be mailed directly to you from the insurance underwriter. You should be named as the recipient on your copy and the expiration date should extend beyond the last day of work at your property. If the contractor hands you a copy of the binder with these details in place, call the underwriter to verify the details.
- Negotiate discounts.Many service businesses offer discounts during the off season or for repeat or high volume customers.
- Manage cash flow by spreading service payments over 12 months. You can do this by working with contractors that accept credit cards or are willing to provide a payment plan.
- When presented with an estimate simply ask, “Is that the best you can do?” Few people realize the power of this question. When you ask this question, be prepared for a discussion, not an amazing discount.
- Talk openly about other estimates you are receiving. This allows the vendor to help provide you with an apples-for-apples comparison. A wide variance in prices between estimates usually means there is a difference in services. Openly discussing estimate details will allow you to more effectively compare estimates and get exactly what you want.
- Take advantage of sales and special offers. These are effective sales tactics, but they are also a great way to save money. And in this electronic age, savvy contractors are offering 'Internet Only' specials.
- Consider bartering. Just like you, contractors hire help. If you have legal, book keeping, graphic design, baby sitting, cooking or other skills, explore options with your contractor. The same goes for material goods. Junk to one person is treasure to another. If they are working on your second home, offer to exchange service for a week of occupancy.
- Ask for references and then check reference with well prepared questions. You will quickly ferret out those vendors that are price gouging. You will also discover the jewels in the rough of service contractors that offer value laden services at good prices.
Web Site Updates
I've been working on our Web site. Added information on upholstery cleaning and a bit of redesign. Your comments are appreciated. Here the link; http://www.cleanascanbeservices.com/.
Watch for my next blog "Post Pollen Planning"
Until then, happy cleaning
Eric Nei, The Cleaning Guy
